Terraform Co-Founder Do Kwon Expected to Admit Guilt in Fraud Case

Jimmy Aki
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Terraform Labs co-founder Do Kwon will be pleading guilty to a lawsuit filed over the collapse of the TerraUSD (UST) stablecoin in 2022. This plea change hearing is scheduled for August 12 in Manhattan federal court.

Kwon’s Shift from ‘Not Guilty’ Hints at Possible Deal with U.S. Authorities

In a court order on Monday, U.S. District Judge Paul Engelmayer directed Do Kwon to be ready to explain in detail how he broke the law if he chooses to plead guilty.

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Recall that Kwon had previously pleaded not guilty to nine felony counts after being extradited from Montenegro to the U.S. The charges include conspiracy to defraud, commodities fraud, securities fraud, wire fraud, market manipulation, and money laundering conspiracy.

However, his “not guilty” plea appears to change now.

A court filing in June revealed that Kwon’s legal representatives had been in discussion with the Southern District of New York’s team, led by interim U.S. Attorney Jay Clayton.

Such extended talks often signal that a negotiated resolution is on the table.

The U.S. and South Korea have charged Kwon in connection with the collapse of TerraUSD. The algorithmic stablecoin lost its peg in May 2022, resulting in investors’ losses of about $40 billion.

Kwon spent months evading authorities before his arrest in Montenegro in 2023. He was extradited to the U.S. in December 2024.

Global Regulators Step Up Oversight to Curb Crypto Fraud

Regulators across the world have been making efforts to forestall another incident similar to the TerraUSD collapse. This is through regulatory oversights to tackle crypto scams.

In the U.S., lawmakers have approved the Genius stablecoin bill. This law strengthens consumer protections in digital payments by mandating full reserve backing, monthly audits, and strict anti–money laundering controls.

The fight to protect citizens and bring bad actors to justice has also intensified in other countries.

India recently seized $4.8 million in assets from Chirag Tomar, who is already serving time in a U.S. prison for defrauding investors of $20 million in a cross-border crypto scam.

In the UK, The Financial Conduct Authority (FCA) prosecuted two men for running a cold-calling crypto fraud operation that stole over £1.5 million from at least 65 victims.

In another enforcement effort, Brazilian authorities are investing in advanced blockchain analysis tools to trace illegal activity and clamp down on money laundering activities involving cryptocurrencies.

About Jimmy Aki PRO INVESTOR

Based in the UK, Jimmy is an economic researcher with outstanding hands-on and heads-on experience in Macroeconomic finance analysis, forecasting and planning. He has honed his skills having worked cross-continental as a finance analyst, which gives him inter-cultural experience. He currently has a strong passion for regulation and macroeconomic trends as it allows him peek under the global bonnet to see how the world works.